HomeMy WebLinkAboutCS 24-02
166
REPORT TO THE
FINANCE & OPERATIONS COMMITTEE
Report Number: CS 24-02
Date: November 11, 2002
From:
Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject:
Industrial and Commercial Vacancy Program
Recommendation:
1. That it is recommended that report CS 24-02 of the Director, Corporate Services &
Treasurer be received for information and that:
2. the attached By-Law providing for the establishment of a property tax rebate
program for the vacant portions of commercial and industrial property, be read
three times and approved; and,
3. the appropriate officials of the City of Pickering be given authority to give effect
hereto.
Executive Summary: This report provides a general description of the City's first
year of experience regarding the commercial and industrial vacancy program as
mandated by the Provincial government. In addition, when the vacancy program was
first introduced, Provincial officials were silent as to the need for the municipality to
pass a property tax vacancy by-law. However, recent information from our property
tax consultant and property tax association has suggested that it may be beneficial to
the municipality to have the vacancy program established through by-law.
Financial Implications: For the current year, the City budgeted $65,000 for its share
of the vacancy rebate. Included in this budget, were funds to hire a consulting service
to audit and verify the validity of the property vacancy claims. The City's year-to-date
cost is approximately $40,000 with the total cost being approximately $270,000.
Background: One of the many changes that the Province introduced in 1998
under the New Fair Municipal Act dealt with vacancies in the commercial and industrial
property classes.
Prior to 1998, whenever a commercial or industrial building was vacant, the property
owner or manager would notify the municipality or the regional assessment office who
would confirm the vacancy and then change the mill rate from commercial/industrial to
residential, which reduced the property taxes by 15 per cent.
Report CS 24-02
Date: November 11, 2002
16'7
Industrial and Commercial Vacancy Program
Page 2
The program was changed for the years 1998 to 2000. Under this program, the owners
of commercial/industrial property could only qualify for a reduced tax rate if the vacancy
occurred during the months of July to September and they notified the assessment
office of the vacancy prior to November 1 of that year. If the property met the criteria,
the tax rate would be reduced by 30 per cent for commercial and 35 per cent for
industrial and the property owner would have the benefit of the reduced rate for the
entire year regardless of the fact that the building may have been occupied for a good
portion of the year. Many commercial and industrial property owners complained to the
Province regarding the inequities of the Provincial vacancy program.
Bill 140 - Introduces New Vacancy Proqram
On December 4, 2000, Royal Assent was given to Bill 140 (Continued Protection for
Property Taxpayers Act), that establishes a new "real time" approach to the taxation of
vacant buildings on commercial and industrial properties. Under this new legislation,
buildings will be shown as fully occupied regardless of whether there are vacant units
in the building. Property owners will now have to submit an application to the local
municipality for a rebate.
Not surprisingly, the Regulation that defined the operation of this legislation/program
was issued nine months later. Ontario Regulation 325/01 was filed on August 20, 2001,
and this regulation defined the types of properties that are eligible, the application
process, deadlines and penalties and the method of calculating the rebate entitlement.
Basic Vacancy Rules
Only commercial and industrial buildings that are either entirely vacant or partially
vacant for at least 90 consecutive days are eligible for the program. In addition,
buildings that are vacant due to seasonal basis or new buildings that have never been
occupied are not eligible. The eligibility criteria is explained in more detail on the City's
website and on the application form itself. The property owner has until February 28th
of the following year as a deadline to submit an application. In other words, the
deadline to submit an application for 2002 is February 28, 2003. The rebate for
commercial properties is 30% and 35% for industrial properties.
Pickerinq's Experience - First Year of the Proqram
Taxation staff received approximately 130 applications around the deadline due date of
February 28, 2002 for the 2001 taxation year. As soon as the form is received, it is
checked to ensure that all of the required information has been provided. The property
owner or his agent is required to provide detailed information regarding the vacancy
including lease agreements and proof that the landlord is attempting to lease or rent the
vacant unit. The vacancy application is then forwarded to the Municipal Property
Assessment Corporation (MPAC) after all of the information has been provided. MPAC
is responsible for determining the applicable assessment for the vacant unit to be used
in the rebate calculation.
168
Report CS 24-02
Date: November 11 , 2002
Industrial and Commercial Vacancy Program
Page 3
The vacancy rebate is calculated using the following formula:
Value of vacant Area taxes levied on number of days vacancy 30% (Com)
----------------- - ------- --- X whole property for X ------- - - - ------ ---------- ---- - X or
Assess. Value property for the year total number of days in yr. 35% (lnd)
After the information is received from MPAC, the data is entered into the taxation billing
software to calculate the rebate amount. In addition, taxation staff will also review the
system generated rebate cheque.
Taxation Staff Actions
As mentioned earlier in this report, this is the City's first year of managing the vacancy
program. When the program was first introduced, staff were unsure as to the workload
demands of this program. The 2002 budget did not provide any additional staffing
resources due to a financial "tight" budget year and management decided that it would
be best to have at least one year's experience. Our year-to-date experience indicates
that this program has consumed approximately 450 hours of staff time. Taxation staff
spend a large majority of their time following up with landlords or property owners
regarding the information requirements of the program. By staff reviewing the
applications and information submitted, approximately $8,400 was saved in vacancy
rebates. The workload for this program has been managed through the use of
overtime, reprioritization of activities/tasks and by promoting as much as possible
automated process such as electronic property tax payment and the pre-authorized
property tax payment plan.
For the 2001 taxation year, the (gross) dollar value of the vacancy rebate was
approximately $270,000. The cost of rebate is shared with Region, City and School
Boards in the same proportion as is the revenue (property taxes) with the City's share
being $40,000.
The potential decrease in property taxes to the property owner and its corresponding
reduction in revenue for the City places a high degree of responsibility on taxation staff.
Whenever a level of Government processes rebate/refund cheques, there needs to be
a high degree of accountability and verifiability to ensure that the rebate is correctly
applied and processed and therefore, to reduce the possibility of abuse. To verify and
audit the 2001 vacancy applications, taxation staff used the Vacancy Verification
Service (WS) as provided by MPAC. MPAC's investigators would verify the data on
the vacancy application by basically inspecting the property and interviewing adjoining
tenants or neighbours. By employing MPAC's services, taxation staff were able to
assist property owners on revising their vacancy application forms to more accurately
reflect the facts. By employing the VVS service, approximately $8,100 in potential
vacancy rebates was reduced. In addition, under Section 442.5(20) of the Municipal
Report CS 24-02
Date: November 11, 2002
169
Industrial and Commercial Vacancy Program
Page 4
Act, anyone making a false vacancy applications is subject to a fine of not more "than
an amount that is twice the amount of the rebate sought and not less than $500."
An additional benefit of the verification service is that it sends a positive message to the
business community that the City is exercising a high degree of care regarding its
stewardship function.
Conclusion
When the vacancy program was first introduced, Provincial officials were silent as to the
need for the municipality to pass a property tax vacancy by-law. However, recent
information from our property tax consultant and property tax association has
suggested that it may be of benefical to the municipality to have the vacancy program
formally established through by-law.
Attachments:
1. By-Law to Establish a Property Tax Rebate Program
Prepared By:
Approved I Endorsed By:
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Gillis A. Paterson
Director, Corporate Services & Treasurer
----
Stan Karwowski
Manager, Finance & Taxation
GAP:vw
Attachment
Copy: Chief Administrative Officer
Recommended for the consideration of
Pickering City Council
7'
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170
ATTACHMENT#..,L.TOREPORT#LL.él«-- Od
THE CORPORATION OF THE CITY OF PICKERING
BY-LAW NO.
102
Being a by-law of The Corporation of the City of Pickering to
Establish a Property Tax Rebate Program for the Vacant
Portions of Property in the Commercial Property Class or
the Industrial Property Class.
WHEREAS the Corporation of the City of Pickering (the "Municipality") is required to
have a property tax rebate program for the vacant portions of property in the
Commercial Property Class and the Industrial Property Class, both as defined in
s. 363(20) of the Municipal Act, pursuant to s. 442.5 of the Municipal Act, R.S.O. 1990,
c.M.45, as amended (hereinafter referred to as the "Act") and;
WHEREAS s. 442.5 of the Act has been supplemented by Ontario Regulation Number
325/01 (hereinafter referred to as "OReg. 325/01') and;
WHEREAS the Council of the City of Pickering deems it appropriate to enact this By-
Law for the purpose of establishing a property vacancy tax rebate program.
NOW THEREFORE THE COUNCIL OF THE CORPORATION OF THE CITY OF
PICKERING HEREBY ENACTS AS FOllOWS:
1. In this By-Law:
"assessment corporation" means the Municipal Property Assessment Corporation
("MPAC") or its successor;
"base property" has, for the purposes of this by-law, the meaning prescribed by
s. 2(1) of OReg. 325/01;
"eligible property" means property that has been prescribed as such by the Minister
of Finance (hereinafter referred to as the "Minister") in OReg. 325/01 for the
purposes of s. 442.5 of the Act;
"eligible property classes" means property that is in the Commercial property class
or the Industrial property class as defined in s. 363(20) of the Act;
"inspector" means either another person designated by the Treasurer of the
Municipality or an employee of the Municipality, either of whom will conduct
inspections and investigations pursuant to this by-law;
"mixed use property" means if portions of a property are classified in different
property classes on the assessment roll, each portion shall be deemed to be a
separate property for the purposes of this by-law;
"period of time" means the period of time provided for in s. 1, 2, 3 and 4 of OReg
325/01 unless otherwise provided for in this by-law;
"time" is a reference to a period of at least ninety (gO) consecutive days shall be
read as a reference to a period of at least eighty-nine (89) consecutive days if the
period includes all of the month of February;
"Treasurer" means the Treasurer of theCity of Pickering;
"use" for the purposes of this by-law, the following activities or factors, without some
other activity, do not constitute the use of a building or structure of a portion of a
building:
i) Construction, repairs or renovation;
ii) Heating, cooling, lighting or cleaning; or
iii) The presence of fixtures.
2. This by-law shall apply commencing January 1, 2002.
3. The provisions of this by-law shall be administered by the Treasurer of The City of
Pickering.
171
4. This by-law shall apply where:
a) a building or structure on property in an eligible property class is unused for at
least ninety (90) consecutive days as provided for in s. 1 (1) of OReg. 325/01
and for the purposes of this by-law such a vacancy shall be referred to as a
"Complete Vacancy";
b) a portion of a building on property in the Commercial property class is Unused for
at least ninety (90) consecutive days and the unused portion of the building was
clearly delineated or separated by physical barriers from any used portion of the
building provided that the unused portion of the building was:
(1) capable of being leased for immediate occupation;
(2) capable of being leased but not for immediate occupation due to repairs,
renovations or construction that was either needed or underway; or
(3) unfit for occupation;
as provided for in s. 1 (2) of OReg. 325/01 and for the purposes of this by-law
such a vacancy shall be referred to as a "Commercial Partial Vacancy";
c) a portion of a building on property in the Industrial property class is unused for at
least ninety (90) consecutive days and the unused portion of the building was
clearly delineated or separated by physical barriers from any used portion of the
building as provided for in s. 1 (3) of OReg. 325/01 and for the purposes of this
by-law such a vacancy shall be referred to as an "Industrial Partial Vacancy"; .
5. Notwithstanding anything in this by-law, no property shall be considered entitled to
any rebate relief under this by-law where the building, structure or portion of the
building is:
a) Used for commercial or industrial activity on a seasonal basis;
b) Leased to a tenant who is in possession of the leasehold interest throughout the.
period of time; or
c) Included in a subclass for vacant land under subsection 8(1) of the Assessment
Act, RS.O. 1990, c.A.31, as amended, throughout the period of time.
6. Subject to Section 10 hereof, a property owner or its authorized agent may make a
one application for the taxation year to the Municipality where the eligible property is
located for a rebate of property taxes in respect vacant eligible property.
7. The application required by the Municipality shall be set out in Schedule "A".
8. The application shall be accompanied by such additional information and
documentation as the Treasurer reasonably deems to be appropriate.
9. The application shall be accompanied by a Statutory Declaration, sworn under oath
or affirmed by the owner of the property that all of the contents of the application
and the accompanying information are true and correct
10. The application for a taxation year shall be made after January 1 of the taxation year
and no application shall be accepted later than the last day of February of the year
following the taxation year.
172
11.An interim application for a taxation year may be made for the first six months of the
taxation year.
12.A copy of the application, or interim application. shall be forwarded to the
assessment corporation for determination of the value of the eligible property.
13.An inspector may attend and make entry to the buildings and structures on the
property at all reasonable times and upon reasonable notice to the owner or its
manager for the purposes of:
a) Verifying all information accompanying the application;
b) Obtaining such other information from every adult person present on the property'
as is required to assist in determining the applicant's entitlement to the vacancy
rebate;
c) Requesting or obtaining from the owner or its manager any information or
documents relevant to the determination of the applicant's entitlement to the
vacancy rebate.
14. The Treasurer may, by written request sent by mail, delivered personally or by
courier, require the owner or its manager to provide any information or documents
relevant to the determination of the applicant's entitlement to the vacancy rebate.
15. The Treasurer may establish a reasonable time within which the owner or its
manager is required to respond to a request made by the Municipality under Section
14 hereof.
16.As soon as practicable after receipt of:
a) all of the information and documents relevant to the determination of the
applicant's entitlementto the vacancy rebate; and
b) the determination by the assessment corporation of the value of the eligible
property;
the Treasurer of the Municipality shall determine if the applicant is entitled to a
vacancy rebate and, if so entitled, the rebate shall be calculated as follows:
Multiply the applicable percentage derived from Paragraphs 18 or 19 hereof to
the taxes applicable determined as follows:
(a) Determine the apportioned taxes as the percentage that the value of the
eligible property is of the base property multiplied by the taxes for municipal
and school purposes for the base property, for the taxation year;
(b) Determine the vacancy pe¡'¡od as a percentage of the taxation year; and
(c) Multiply the apportioned taxes by the vacancy percentage.
17 .In the event the vacancy period. begins after October 3 in the immediately preceding
taxation year then the amount of taxes for municipal and school purposes under.
s. 15(i)( 1) hereof is determined by adding the amounts as directed by s. 2(4) of .
DReg 325/01.
18. The amount of rebate in respect of eligible property in the Commercial property
class shall be thirty percent (30%) of the taxes applicable to the vacant area.
19. The amount of rebate in respect of eligible property in the Industrial property class
shall be thirty-five percent (35%) of the taxes applicable to the vacant area.
20.A rebate determined under s. 16 hereof shall be paid by the Municipality to the
owner of the eligible property as soon as practicable following determination and a
copy of the calculation shall be provided to the owner.
21.ln the event a application is determined to be not entitled to a vacancy rebate the
Treasurer shall advise the owner or its authorized agent, as the case may be, in
writing.
173
22.A rebate shall be recalculated in the eventthat:
a) taxes of the base property are reduced under s. 442 or s. 443 of the Act; or
b) the assessment of the base property is changed as a result of the following:
i) a reconsideration under s. 39.1 of the Assessment Act;
ii) an appeal under s. 40 of the Assessment Act; or
iii) a Court application under s. 46 of the Assessment Act.
23.lf, as a result of a recalculation under s. 22 hereof the Municipality has paid or
credited an owner an amount greater than that determined as a result of the
recalculation then the Municipality may recover the excess amount.
24. If, as a result of a recalculation under s. 22 hereof the Municipality has paid or
credited an owner an amount less than that determined as a result of the
recalculation then the Municipality shall payor credit the owner the additional rebate
amount as soon as practicable following the recalculation.
25. The Treasurer may calculate the rebate amount under this by-law based on an ;
estimate of the amount of taxes for municipal and school purposes and then
subsequently adjust the rebate amount when the amount of taxes is finally
determined for the taxation year.
26.Any rebate that a property owner is entitled to under this By-Law may be set-off as a
credit against any unpaid taxes or interest in respect of the property.
27.ln the event a rebate is erroneously paid under this By-Law, the Treasurer may,
within two years after the application for the vacancy rebate was made, notify the
owner of the amount of the overpayment and any such overpayment shall be
deemed to be taxes for municipal and school purposes.
28. The costs of the property vacancy rebate program shall be shared proportionately
by the municipalities and school boards as the municipalities and school boards
share in the revenue from the taxes on the property.
29. Interest on rebates determined under this by-law shall be paid in accordance with
the provisions of s. 442.5(21) of the Act and s. 6, 7 and 8 of OReg. 325/01.
30.Any person who knowingly makes a false or deceptive statement in an application
made to the Municipality or in any other document submitted to the Municipality
under this by-law is guilty of an offence and is liable on conviction to a fine that is
the greater of $500.00 and twice the amount of the rebate obtained or sought to be
obtained by the false or deceptive statement.
BY-LAW read a first, second and third time and finally passed this 16th day of
December, 2002.
Wayne Arthurs, Mayor
Bruce Taylor, Clerk
~. Schedule "A"
~
Application for Rebate of Property Taxes
For Vacancies in Commercial & Industrial Property
Application No.
1~¡4
For Adjustment of Taxes for the Year
N~
01421
INSTRUCTIONS
The DEADLINE for submitting applications is February 28 of the year following the taxation year to which the application refers. .
Applications must be delivered to: Tax Section
Corporate Services Department
City of Pickering
Pickering Civic Complex
One The Esplanade
Pickering, ON L1V6K7 .
. Any pe~n who knowingly makes a false or deceptive statement in this application is guilty of an offence and upon conviction, is liable for a fine.
To bEi eligible for a rebate, a building or portion of a building must.satisfy the cònditions described in Category 1 or Category 2 below.
Tel:
Fax:
905-420-4614
905-420-5313
ELIGIBILITY (please check 0 to confirm eligibility)
CATEGORY 1 - BuIldings that are EntIrely Vacant
A whole commercial or industrial building will be eligible for rebate. if:
0 the entire building was unused for 90 consecutive days.
CATEGORY 2 . Buildings that are Partially Vacant
A suite or unit within a commercial building will be eligible for rebate if, for at least 90 consecutive days it was:
0 unused; and
0 clearly delineated or physically separated from the used portions of the building; and
0 either 0 capable of being leased for immediate occupatIon, or
0 undergoing or in need of repairs or renovations that prevented it from
being available for lease for immediate occupation, or
0 unfit for occupation.
A portion of an industrial building will be eligible for a rebate if for at least 90 days consecutIve days, it was:
0 unused, and '
0 clearly delineated or physically separated from the used portions of the building.
EXCLUSIONS
A building or portion .of a building will not be eligible for a rebate if:
it is used for commercial or industrial activity on a seasonal basis;
during the period of vacancy if was subject to a lease, the term of which had commenced; or
during the period of vacancy It was included in a sub-class for vacant land.
PROPERTY INFORMATION
Property Ad<jress (Number and Street)
CltylTownfMunlcipallty, elo.
Pickerin
Roll Number
(Bee your notice of property -me¡¡!, your property tax bill, or oonlacl your local municipality) .
Provinœ
Ontario
POBtal CodB
Owner's Name
Melling Address (Number and Street)
Melling Address (Number and Street)
CltylToWl.~.;"nlcipallty, elc,
Province
Postal Code
CltylTownlMunlcipellty, etc.
ProvInce
Phone Number Fox Number Phone Number
( ) ( ) ( )
Description of Vacant Area Size of Vacant PIIrfod of Vacancy (Must be at leest 90 consecutive days)
(Include unlUsuile number, floor number, Area In Sq. Fl FROM TO
building number. AttacI1 sketch If necessary) day day
00
Sq. Ft.
DO
00
"".Ft.
"".Ft.
00
Sq. Ft.
00
Sq.Ft.
~
The information on this fonn is collected underthe authority of section 442.6 of the Municipal Act end Onlario Regulation 325101 antftt Will be used only for tha purposes of
determining eligibility for a proparty lax rebete end the amount of the rebeta In respect of vacant commercial and Industrial buildings. Questions about the collection of
personel information should be directed to your local municipal office,